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When Turnover is a Problem…

When Turnover is a Problem…. …it’s Not Your Biggest One! Dan Oakland, HR Consultant www.alternative hrd .com. To help you… U nderstand and analyze TO rates Identify your ‘optimal’ TO level Understand business cost of TO Identify causes of unwanted TO.

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When Turnover is a Problem…

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  1. When Turnover is a Problem… …it’s Not Your Biggest One! Dan Oakland, HR Consultantwww.alternativehrd.com

  2. To help you… • Understand and analyze TO rates • Identify your ‘optimal’ TO level • Understand business cost of TO • Identify causes of unwanted TO Today’s Objectives Regarding Turnover (TO): www.alternativehrd.com

  3. Why do we want low turnover? Question? www.alternativehrd.com

  4. The lower the turnover, the better. Fact or Myth? www.alternativehrd.com

  5. Which costs more, losing a high performer or losing a low performer? Which costs more, losing a low performer or keeping a low performer? Question? www.alternativehrd.com

  6. Turnover is costly, but it is not always a bad investment. Observations! www.alternativehrd.com

  7. Low TO can be a sign of a healthy organization… …but low TO can also be a sign of complacency, stagnation and entitlement. Observations! www.alternativehrd.com

  8. High TO can be a sign of turmoil and low productivity… …but it may also be needed to change culture and dynamics, and to improve productivity and profitability. Observations! www.alternativehrd.com

  9. While the cost of TO is higher than most people realize, sometimes it is an investment work making. Observations! www.alternativehrd.com

  10. Unacceptable TO levels are typically symptoms of other problems, i.e. management, culture, frustration with wages, benefits or safety, lack of opportunity, poor job fit, or life events. Observations! www.alternativehrd.com

  11. What we really want… Low or no TO among high performers, and High TO among low performers. Reality! www.alternativehrd.com

  12. “But boss, I’m just deep in thought!” www.alternativehrd.com

  13. # of Employee Separations Per Year Divided by Average # of Employees x 100 Equals Annual Turnover Rate Example: 22/127 = .173 x 100 = 17.3% Understanding TO Rate www.alternativehrd.com

  14. Understanding TO Rate www.alternativehrd.com

  15. Understanding TO Rate www.alternativehrd.com CompensationForce.com; Ann Bares, Managing Director, Altura Consulting Group, 2014

  16. Understanding TO Rate www.alternativehrd.com CompensationForce.com; Ann Bares, Managing Director, Altura Consulting Group, 2014

  17. Department of Labor • Trade Associations • Internet Searches • http://www.bls.gov/jlt/ • http://www.compensationforce.com/2014/02/2013-turnover-rates-by-industry.html • http://www.nobscot.com/about/turnover_statistics.cfm Finding Industry Averages www.alternativehrd.com

  18. Look at Voluntary v. Involuntary TO • Look at Avoidable v. Unavoidable TO • Look at High v. Low Performance TO • Compare your TO to industry average • Compare your TO to your average • Compare TO to your best profit years Setting a Turnover Target www.alternativehrd.com

  19. Your goal is… ____% TO among high performers? ____% TO among low performers? Setting a Turnover Target www.alternativehrd.com

  20. Jack Welch created GE’s ‘rank-and-yank’ system: • 20% most productive • 70% adequate • 10% non-producers who • should be fired Setting a Turnover Target www.alternativehrd.com

  21. Under Welch, GE’s market value grew from $14B to $410B and revenue multiplied fivefold to $130B. Setting a Turnover Target www.alternativehrd.com

  22. First Goal with Low Performers: Give them an Opportunity to Improve! www.alternativehrd.com

  23. Costs Associated with TO • Termination Costs • Hiring Costs (Hiring Replacement) • Onboarding Costs (Replacement) • Production Costs • Legal Costs www.alternativehrd.com

  24. Performance Differentiation www.alternativehrd.com

  25. XYZ Company: Sales $25M; FTE’s 50 $25m/50=$500,000 revenue per employee Top Performer @ 150% = $750,000 Average Employee = $500,000 Low Performer @ 50% = $250,000 Performance Differentiation www.alternativehrd.com

  26. Estimated Turnover Cost (from averaging several turnover studies) Costs Associated with TO www.alternativehrd.com

  27. Dealing with Unwanted Turnover www.alternativehrd.com

  28. Lack of + Relationship with Boss • Lack of + Relationships with Co-workers • Bored / Unchallenged by the Work • Not Using Skills and Abilities • Lack of Autonomy and Independence • Not Finding ‘Meaningfulness’ in Work • Corporate Culture • Financial Instability • Life Events Causes of Unwanted TO www.alternativehrd.com

  29. Unwanted Turnover in First 12 Month • Hiring Mistakes • Lack of Training & Support • Lack of Early Engagement • Not ‘Clicking’ with Manager Causes of Unwanted TO www.alternativehrd.com

  30. Causes of Unwanted TO • Find Out Why People are Leaving You: • Exit Interviews (marginally helpful) • Better: Call 4-6 Weeks After Termination • Best: Talk to Current Employees www.alternativehrd.com

  31. “People leave managers not companies…in the end, turnover is mostly a manager issue.” Gallup, No 1 Reason People Quit Their Jobs Causes of Unwanted TO www.alternativehrd.com

  32. Analyze Your Turnover • Set an ‘Optimal’ Target • Look at Your Cost of TO • ID Causes of Unwanted TO • Manage Your TO Your Challenge www.alternativehrd.com

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